Production of Ambassador sedan suspended indefinitely

Snapshot: Operations at Hindustan Motors’ plant in Uttarpara in West Bengal have been stopped, due to critical shortage of funds.

Earlier this month we had reported how Hindustan Motors were desperately seeking new investors in order to revive its loss-making plant in Uttarpara, West Bengal. This week however, it has been reported that the company has now officially suspended the production at the said plant and so, has the production of the iconic Ambassador sedan.

The move came to light via a notice that the company sent to the stock exchange. It read, “The company has been transparent in sharing updates about the worsening conditions of the Uttarpara unit, which includes low productivity, critical shortage of funds, lack of demand for its core product - Ambassador cars and large accumulation of liabilities.

It further added, “Given the circumstances, the company has no alternative but to suspend operation of its Uttarpara plant till further notice. The suspension of work will help restrict mounting liabilities, restructure its organisation and finances, as well as bring in a situation conducive to re-opening of the plant.”

Back in April, Hindustan Motors handed over the possession of its Chennai car plant to a separate entity - Hindustan Motor Finance Corporation - in order to cut losses and to improve the overall health of the company. Through this de-merger, the company had hoped to raise around Rs 150 crore.

A couple of years ago, the plant was producing 700 to 800 Ambassadors sedans per month. However, in April 2014 the facility was able to churn out a mere 100 units, due to lack of funds. The facility has been facing losses to the tune of Rs 7 to 8 crore per month. The amount of huge losses with almost no cash inflow in the company has proved to be a really tough situation for the automaker.

Hindustan Motors - India’s oldest carmaker - had been manufacturing the Ambassador sedan at the Uttarpara plant since the 1957. The iconic curve-shaped sedan has changed little in nearly 60 years of its existence and until the 2003 was the only car that was used to chauffeur politicians and other top officials in the country.